Cautionary Statement Regarding Forward-Looking Statements
This report contains "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities Act"), and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward looking statements. Forward-looking statements are not
statements of historical facts, but rather reflect our current expectations
concerning future events and results. The words "may," "will," "anticipate,"
"should," "would," "believe," "contemplate," "could," "project," "predict,"
"expect," "estimate," "continue," and "intend," as well as other similar words
and expressions of the future, are intended to identify forward-looking
statements.
Factors that may cause actual results to differ from those results expressed or
implied, include, but are not limited to, those listed under "Risk Factors" in
our Annual Report on Form 10-K for the year ended December 31, 2019 filed by the
Company with the Securities and Exchange Commission (the "SEC") on March 30,
2020.
These forward-looking statements generally relate to our plans, objectives and
expectations for future events and include statements about our expectations,
beliefs, plans, objectives, intentions, assumptions and other statements that
are not historical facts. These statements are based upon our opinions and
estimates as of the date they are made. Although we believe that the
expectations reflected in these forward-looking statements are reasonable, such
forward-looking statements are subject to known and unknown risks and
uncertainties that may be beyond our control, which could cause actual results,
performance and achievements to differ materially from results, performance and
achievements projected, expected, expressed or implied by the forward-looking
statements. While we cannot assess the future impact that any of these
differences could have on our business, financial condition, results of
operations and cash flows or the market price of shares of our common stock, the
differences could be significant. You are cautioned not to unduly rely on such
forward-looking statements when evaluating the information presented in this
report and you are urged to consider all such risks and uncertainties. In light
of the uncertainty inherent in such forward-looking statements, you should not
consider their inclusion to be a representation that such forward-looking
matters will be achieved.
General Overview
The Company is a "shell company", as defined in Rule 12b-2 of the Exchange
Act. Because we are a shell company, our stockholders are unable to utilize Rule
144 to sell "restricted stock" as defined in Rule 144 or to otherwise use Rule
144 to sell our securities, and we are ineligible to utilize registration
statements on Form S-3 or Form S-8 for so long as we remain a shell company and
for 12 months thereafter. As a consequence, among other things, the offering,
issuance and sale of our securities is likely to be more expensive and time
consuming and may make our securities less attractive to investors.
The Company's Board of Directors is considering strategic uses for its funds to
develop or acquire interests in one or more operating businesses. While we have
focused our development or acquisition efforts on sectors in which our
management has expertise, we do not wish to limit ourselves to, or to foreclose
any opportunities in, any particular industry or sector. Prior to this use, the
Company's funds have been, and we anticipate will continue to be, invested in
high-grade, short-term investments (such as cash and cash equivalents)
consistent with the preservation of principal, maintenance of liquidity and
avoidance of speculation, until such time as we need to utilize such funds, or
any portion thereof, for the purposes described above. The directors will also
consider alternatives for distributing some or all of its cash and cash
equivalents to stockholders.
Results of operations
Three months ended September 30, 2020 compared to the three months ended
September 30, 2019
For the three months ended September 30, 2020, the Company had a loss from
operations before income taxes of $47,000 compared to a loss from operations
before income taxes of $458,000 for the three months ended September 30, 2019.
The decreased loss before income taxes of $411,000 was primarily as a result of
a decrease in Other operating expenses of $259,000 mainly as the result of
decreased professional fees and decreased rent expense, offset by an increase of
Compensation and benefits of $59,000 and increase in Interest and other income
of $211,000, primarily as the result of the sale of the Company's former ticker
symbol (WISH) for consideration of $250,000.
Compensation and benefits
For the three months ended September 30, 2020, Compensation and benefits were
$105,000 as compared to $46,000 for the three months ended September 30, 2019
primarily as the result of a temporary decrease of the CEO compensation during
the third quarter of 2019. Effective October 1, 2019, the Company's Compensation
Committee reversed the temporary decrease of the CEO's compensation to reflect
his duties in exploring strategic alternatives for the Company. The increase
compensation was offset by a decrease in the health plan expense for the three
months ended September 30, 2020 in comparison to the three months ended
September 30, 2019.
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Other operating expenses
For the three months ended September 30, 2020, Other operating expenses were
$193,000 as compared to $452,000 for the three months ended September 30, 2019.
The decreased operating expenses of $259,000 were primarily the result of
decreased professional fees of $180,000, decreased rent expense of $50,000 and
decreased other expenses of $29,000.
Income taxes
The Company recorded an income tax benefit of $19,000 for the three months ended
September 30, 2020, which predominantly represents an adjustment to the income
tax liability. For the three months ended September 30, 2019, the Company
recorded income tax expense from continuing operations of $1,000, which
represented minimum state taxes. No tax benefit has been recorded in relation to
the pre-tax loss for the three months ended September 30, 2020 and 2019, due to
a full valuation allowance to offset any deferred tax asset related to net
operating loss carry forwards attributable to the losses.
Nine months ended September 30, 2020 compared to the nine months ended September
30, 2019
For the nine months ended September 30, 2020, the Company had a loss from
operations before income taxes of $711,000 compared to a loss from operations of
$1,438,000 for the nine months ended September 30, 2019.
The decreased loss before income taxes of $727,000 was the result of a decrease
in Other operating expenses of $686,000, offset by an increase in Compensation
and benefits of $38,000 and an increase in Interest and other income of $79,000,
primarily as the result of the sale of the Company's former ticker symbol (WISH)
for consideration of $250,000.
Compensation and benefits
For the nine months ended September 30, 2020, Compensation and benefits were
$364,000 as compared to $326,000 for the nine months ended September 30, 2019
primarily as the result of a temporary decrease of the CEO compensation during
the third quarter of 2019. Effective October 1, 2019, the Company's Compensation
Committee reversed the temporary decrease of the CEO's compensation to reflect
his duties in exploring strategic alternatives for the Company. The increase
compensation was offset by a decrease in the health plan expense for the nine
months ended September 30, 2020 in comparison to the nine months ended September
30, 2019.
Other operating expenses
For the nine months ended September 30, 2020, Other operating expenses were
$658,000 as compared to $1,344,000 for the nine months ended September 30, 2019.
The decreased operating expenses of $686,000 were primarily the result of
decreased professional fees of $409,000, decreased rent expense of $147,000,
decrease expenses associated with remediation of the reservoirs of $27,000, and
decreased other expenses of $103,000.
Income taxes
The Company recorded an income tax benefit of $19,000 for the nine months ended
September 30, 2020, which predominantly represents an adjustment to income tax
liability. For the nine months ended September 30, 2019, the Company recorded
income tax expense from continuing operations of $26,000, which represented
minimum state taxes. No tax benefit has been recorded in relation to the pre-tax
loss for the nine months ended September 30, 2020 and 2019, due to a full
valuation allowance to offset any deferred tax asset related to net operating
loss carry forwards attributable to the losses.
Financial condition
Liquidity and Capital Resources
At September 30, 2020, the Company had cash and cash equivalents totaling
$6,734,000, which it intends to use to acquire interests in one or more
operating businesses, to fund the Company's general and administrative expenses,
and the directors will also consider alternatives for distributing some or all
of its cash and cash equivalents to stockholders. The Company believes that its
working capital is sufficient to support its operating requirements through
November 30, 2021.
Cash equivalents represent short-term, highly liquid investments, which are
readily convertible to cash and have maturities of three months or less at time
of purchase. Please refer to note 4 for valuation on Investments.
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The decrease in cash and cash equivalents of $602,000 for the quarter ended
September 30, 2020 was primarily the result of $655,000 used in operating
activities, offset by proceeds from a PPP loan of $53,000.
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